Show Me The Money!

Clint Peck Associate Editor

Mon, 2001-10-01 12:00

Preconditioning decisions have long been a show me the money proposition. This is especially true with regard to preweaning disease prevention practices. There's little doubt that special preweaning treatment carries a payback on the finishing end of the cattle life cycle. Still, feeders traditionally have been reluctant to pay ranchers who try to optimize the immunity of their calves. As the cattle

Preconditioning decisions have long been a “show me the money” proposition. This is especially true with regard to preweaning disease prevention practices.

There's little doubt that special preweaning treatment carries a payback on the finishing end of the cattle life cycle. Still, feeders traditionally have been reluctant to pay ranchers who try to optimize the immunity of their calves.

As the cattle industry shifts from getting paid for live animal weight to getting paid for carcass traits like size, quality and composition, the importance of preventing disease is taking on a new look. Meanwhile, the more abundant and improved performance information pouring in from feedyards and packing plants is giving calf buyers more ammunition when pricing calves.

Whether you're a stand-alone operator or a link in a supply chain, management practices that prevent bovine respiratory disease (BRD) and enhance first-treatment response are hard to argue with. All it takes is a look at the costs related to treatment.

The direct costs of treating “sick” calves fed through the Texas A&M Ranch-to-Rail Program from 1992-2000 ranged from $20.76 to $37.90/head. These medicine costs translated to increased cost of gain ranging from $4.15 to $7.58/cwt. during the finishing phase. Meanwhile, sick calves gained 0.09 to 0.39 lbs./day less.

If calves go to the sick pen a second time, the losses mount. Ranch-to-Rail calves treated twice for BRD gained 0.40 to 1.21 lbs./day less than healthy calves.

Ranch-to-Rail data also shows that the percentage of Choice carcasses falls 7% to 19% when calves become sick during finishing. Carcass value fell $0.54/cwt. in calves treated once and $2.31/cwt. in calves treated twice for a respiratory disease episode.

A real-life experience with the costs associated with BRD has Steve Christensen, Corvallis, MT, owner of Montana Livestock Marketing, convinced that ranchers need to make moves to reduce BRD infection in their calves.

Christensen's business specializes in retained ownership and performance data collection. A year ago, he bought a set of 120 “bawling” Wyoming steer calves and fed them in a Kansas feedyard.

After suffering a death loss of 3.5%, pen riders pulled 42 head to treat for BRD-related illness at $12.50/head. Half of those calves had to be retreated. The loss in gain due to morbidity was calculated at $1,309 with a total cost of sickness of $4,376.50 or $37.73/head sold.

“We paid $6.29/cwt. too much for these calves,” says Christensen.

The losses due to quality and yield grade discounts were not considered in this case — costs which would have been significant, says Christensen. “But, realistically, on a pen basis, preconditioning enhances carcass value by anywhere from $2 to $5 per head.”

Next year, Christensen won't offer that particular rancher less money for his calves. He just won't buy them. Currently, about 20% of his calves each year are not preconditioned — and each year he has a harder time finding a home for those kind of calves.

“I'm not trying to be brutal,” says Christensen. “I want people to understand that today calves are priced with the preconditioning built in the price structure.”

Justin Gifford, manager of Champion Feeders, Hereford TX, has bought 3,500 calves/year over the last three years. After calculating the costs of BRD — and the associated losses — he's also become tough on “wet” calves.

“We buy calves and mandate a strict weaning program,” says Gifford. “If the rancher weans the calves on the ranch, we pay him a base price,” he explains. “If he sells the calves right off the cow, there will be a discount.”

Champion sells at least 90% of their fed cattle on some form of a grid or formula. Nearly all are electronically identified.

If Champion buys 600-lb. steer calves for $1.10, Gifford will subtract $8/cwt. from the price for wet or unweaned calves.

“Over the past three years, we've learned who'll wean their calves and do it properly,” says Gifford.

Champion also runs several thousand feeder cattle outside the feedyard at any given time.

“The first year the outside managers were only interested in pounds of gain produced,” adds Gifford.

However, they realized the cattle pulled and treated for BRD more than once cost more and brought back fewer gross dollars from the packer.

“Now they understand, and we separate the treated cattle on pasture, and they never come to the yard,” he says.

One problem with straightening out cattle before they come to the yard or not accepting “high-stressed” cattle is that cowboys may over-react when a new pen of cattle begins to break.

“However, I would much rather a cowboy be a little too cautious in the beginning rather than spend the next 150 days reacting,” Gifford concludes.

He Does't Buy It

Cow/calf producer and veterinarian, Ted Hoffman, Mountain Home, ID, doesn't always buy the “it's in the price” line when preconditioning for BRD.

“I don't accept that the best I can do is avoid a discount. I'll do everything I can to lever what I do with my calves into a higher price,” he says. “That might mean I can't do business with some guys.”

Hoffman, who practices a strict and well-considered weaning protocol, says it all depends on the market.

“There are times at a sale yard when preconditioned calves and bawling calves go for the same money — especially when the market is tight,” he says. “I deal with a broker who doesn't want bawling calves and is willing to pay more than sale barn prices for my calves.”

Last year, he got a 5¢ premium — about $25/calf — for preconditioning for respiratory diseases. His strategy is consistency.

“I try to do business with the same person or the same alliance on a consistent basis,” he explains. “I don't want to have to prove myself and my cattle to a different person every year.”

Hoffman works to prevent diseases as early on in the calf's life as possible with cow and calf vaccines, good nutrition and minimal stress. He rarely treats a calf for BRD from birth to weaning.

Hoffman adds that mass treatment with antibiotics at weaning — either at the ranch or the feedyard — can improve BRD pull rates and re-treatment rates.

“Use of preventive antibiotics is a cost-effective way to cut BRD sickness in the feedyard — but it's not as good as prevention,” he explains. “It all depends how the cattle are handled before they are weaned.”

The key to getting paid for preconditioning is finding a consistent market and sticking to a health management program. The next step involves getting all the performance data you can measure and using it to hold out for the best price.

“If in fact your cattle will perform above average, there are too many markets and programs out there to accept an average price for above average cattle,” concludes Hoffman. “But, it's up to the producer to carry out a preconditioning plan and demonstrate why he should be paid an above-average price.”